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1969 (7) TMI 120

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..... e apparent purpose of the legislation. In the great majority of cases which come before this tribunal all the relevant facts are known to the taxpayer and he has a full opportunity to set out in his statutory declaration all the facts which he thinks are relevant and also all arguments on which he relies. The only advantage to him of having a right to see and reply to the counter-statement of the commissioners would then be that he could reply to their arguments. If the tribunal were entitled to pronounce a final judgment against the taxpayer, justice would certainly require that he should have a right to see and reply to this statement, but all the tribunal can do is to find that there is a prima facie case against him. It is, I think, not entirely irrelevant to have in mind that it is very unusual for there to be a judicial determination of the question whether there is prima facie case. Every public officer who has to decide whether to prosecute or raise proceedings ought first to decide whether there is a prima facie case, but no one supposes that justice requires that he should first seek the comments of the accused or the defendant on the material before him. So there is noth .....

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..... ir ? In the careful address of counsel for the appellants we were referred to many decisions. I think that is was helpful that we should have been. But ultimately I consider that the decision depends upon whether in the particular circumstances of this case the tribunal acted unfairly so that it could be said that their procedure did not match with what justice demand. It is important to have in mind exactly what the tribunal had to do. There was no question of their being required to come to a determination as to whether section 28 applied to the appellants in respect of the transactions in question. There was to be no decision comparable to that in Rex v. Housing Appeal Tribunal [1920] 3 K. B. 334. The decision or determination that the tribunal had to make was whether there was or was not a prima facie case " for proceeding in the matter. " That was a most limited decision. A decision that there was such a case would mean that it could not be said that the commissioners must definitely not give a notice under sub-section (3) because they would certainly be wrong if they gave one. It may well be unlikely, if a taxpayer could not in his statutory declaration point to the .....

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..... not apply. If the tribunal follows the course that Parliament has defined and decides not to extend that course I do not think that by reason of that circumstances alone it should be held that they have acted unfairly. I would dismiss the appeal. LORD GUEST.-My Lords, I have had the advantage of reading the speech of my noble and learned friend Lord Donovan, with which I agree. I have only a few observations of my own to make. Where a question arises as to whether the principles of natural justice should be followed in any particular case it is important, in my view, that the principles upon which this question is to be decided should be reasonably clear and definite. Inferior tribunals should be in a position to know whether, in any particular case, they were called on to apply the principles of natural justice and to what extent those principles should be followed. It would be unsatisfactory if cases where statutory tribunals had been set up were to be decided ex post facto upon some uncertain basis. It is reasonably clear on the authorities that where a statutory tribunal has been set up to decide final questions affecting parties' rights and duties, if the statute is silen .....

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..... decision of a preliminary point which affected parties' rights the principles of natural justice in their full vigour must be employed. Your Lordships were urged to adopt the dissenting judgment of Salmon L. J. in Cozens. The true view, in my opinion, is that expressed by Tucker L. J. in Russell v. Duke of Norfolk .[1949] 1 K. B. 109, 118. " There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case. " In the present case I can see nothing manifestly unfair about the procedure which the statute enjoins to be followed by the tribunal set up under section 28 of the Finance Act, 1960. The provisions in subsection (5) of section 28 con .....

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..... e the court to say that the principles of natural justice were not followed. For these reasons I would dismiss the appeal. LORD DONOVAN.-My Lords, this appeal arises out of the provisions of section 28 of the Finance Act, 1960, which is intended to cancel tax advantages from certain transactions in securities. Where the circumstances defined in the section exist, and a person obtains a tax advantage in consequence of a transaction in securities, or is in a position to do so, then the Commissioners of Inland Revenue may cancel it by an assessment to tax, or by nullifying a right to repayment of tax, or the requiring of the return of a repayment already made, and so on. These consequences are not to follow, however, if the taxpayer shows that the transaction was carried out for bona fide commercial reasons, or in the ordinary course of making or managing investments, and that the obtaining of a tax advantage was not a main object, or one of the main objects, of the transaction. Section 29 of the same Act gives the Commissioners of Inland Revenue power to call for the information they require before setting section 28 in motion. That is done by a notice served on the taxpayer by those .....

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..... id tribunal, and a right of appeal to the High Court by way of case stated on a point of law (section 28(6), (7) and (8)). Where the tribunal finds, on consideration of the three documents mentioned above, that there is prima facie case for proceeding, they are not obliged under any express provision of the section so to notify either the commissioners or the taxpayer. But they must obviously do so, and this matter is covered by their own rules. Likewise the commissioners are under no express statutory obligation to tell the taxpayer that they intend to submit a counter-statement to the tribunal, but their usual practice is to inform him when this has been done. In the present case the taxpayer's solicitors were informed of the commissioners' intention to seek a finding from the tribunal as to the existence of a prima facie case for proceeding ; and they asked for a copy of any counter-statement which the commissioners intended to send to the tribunal. The commissioners replied that they would send a copy if the tribunal found that there was a prima facie case for proceeding. The same solicitors then asked the tribunal for a copy of any such counter-statement but this was l .....

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..... the originating summons should have been struck out, but that the substantive issue should be decided, namely, whether the rules of natural justice required that the appellants should see any counterstatement of the Commissioners of Inland Revenue, and be entitled to reply to it, and have their reply taken into consideration by the tribunal. This issue must be decided by considering section 28 and its purpose as a whole. I start by adopting the words of Lord Tucker in Russell v. Duke of Norfolk [1949] 1 K. B. 109, which I think are in point. He said, at page 118 : " There are, in my view, no works which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter which is being dealt with and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case. " If the C .....

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..... es would be open, and each sides' documents submitted to the tribunal would be available at the subsequent appeal hearings if any took place. Moreover, any unfairness to the taxpayer in his not seeing the counterstatement before it is considered by the tribunal is, in my view, more apparent than real. In view of the complexity of fiscal legislation, transactions which have a tax advantage in view, whether as a main object or not, have to be planned with considerable care and usually with professional assistance. It is well known to the taxpayer or his advisers what has to be done and when ; and if other persons are to play a part, just what they have to do and when ; and what tax advantage is expected to accrue, and when. The taxpayer or his adviser will also have a fairly shrewd idea where any weaknesses of the scheme lie in relation to section 28, and, therefore, to what points any eventual counter-statement of the commissioners is likely to be directed. Accordingly, while it is possible that that counter-statement may introduce new facts outside the taxpayer's knowledge, the cases where this would happen are likely to be much more the exception than the rule. Moreover, i .....

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..... ended the three specified documents to be considered by the tribunal at this preliminary stage, and those three documents alone ; and I reach this conclusion bearing in mind the full rights of appeal against subsequent proceedings which the section confers ; and also the further consideration which I have mentioned above. I do not myself think that the previous practice with regard to the somewhat similar procedure regarding sur-tax introduced in relation to the Board of Referees in the Finance Act, 1927, is of any assistance here. In the Finance Act, 1928, a different procedure was introduced involving the Special Commissioners of Income Tax instead : and, for reasons which are here immaterial, became much more popular with sur-tax payers. My recollection is that thereafter the right to go to the Board of Referees under the 1927 Act was rarely exercised. Both sides apparently agreed that the proceedings before the tribunal would be judicial. It would make no difference to my view whether they were or were not. But since this question could easily arise in some other context and require specific decision. I reserve my opinion upon it : and I do so having in mind what was said in th .....

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..... payer to a point where the courts must supply the legislative omission. I echo the well-known language of Byles J. in Copper v. Wandsworth Board of Works 14 C. C. (N. S.) 180, 194. I need not restate the numerous authorities in which the general principle has been affirmed. The strength and pervasiveness of them have been asserted and reasserted by decisions, English, Australian, Canadian and South African which were cited at the bar. I confine myself to three points particularly emphasised in the present case. First, it is clear that the question, how far the general principle is to be carried, is a relative one. A striking example of this is In re K. (Infants) [1965] A. C. 201 where this House had to decide whether, in infancy proceedings, confidential reports obtained by the guardian ad litem ought to be disclosed to the parties. Lord Hodson pointed out, in language very apposite here (at page 234), the force of the argument that it is contrary to natural justice that the contentions of a party in a judicial proceeding may be overruled by considerations in the judicial mind which the party has no opportunity of criticising or controverting and that the undisclosed evidence may, .....

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..... ther, the party affected had a way open to him to have any order set aside. On this point there are two other decisions of relevance. On the side of the respondents, Cozen's case [1966] 2 Q. B. 330 was invoked to show that an order, vitally affecting a party's interest, may be made ex parte if the relevant Act of Parliament so requires. I must say that I find great force in the dissenting judgment of Salmon L. J. but whether that judgment is to be preferred or not as to cases arising under the Limitation Act, 1963-a matter which must be left open-I cannot find in the majority decision on that unsatisfactory statute a principle to be extended to such a case as the present. The appellants' strongest case was Rex v. Housing Appeal Tribunal [1920] 3 K. B. 334 under the Housing (Additional Powers) Act, 1919. There, in the face of a rule which explicitly entitled the tribunal to dispense with a hearing it was held by the King's Bench Divisional Court that this only entitled them to dispense with an oral hearing and that they must give the appellants an opportunity of making out their case. This certainly illustrates the strength of the underlying principles of natural jus .....

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..... is opinion that the section does not apply and sends this to the commissioners. It is then for the commissioners to decide whether they wish to proceed, and if so they send to the tribunal a certificate to that effect with the statutory declaration and, if they wish, a counter-statement. This may contain fresh facts, or arguments of law, or both. The question to be answered, in my opinion, is this : is it fair that the tribunal should decide on this material : or, in the interests of natural justice or fairness, ought there to be read in a requirement either to allow the taxpayer an opportunity to see and answer the counter-statement, or, perhaps and, to allow him some kind of hearing. Thus, this is not a case where the court has to supply the requirement audi alteram partem. The requirement is, up to a point, already and expressly there. The question is, whether it is so imperfectly or inadequately imposed that the court should extend it. I do not find this easy to decide. On the taxpayer's side, there is the natural aversion against allowing a decision to be made on the basis of material he has not seen : and he can meet the objection that to allow him to see the counter-stat .....

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..... t they will have in mind that justice to the revenue requires that, since a decision one way is conclusive, the revenue ought to have the last word. In reaching the above conclusion I have not been influenced by the procedure said to have been followed over many years by the Board of Referees established with a similar jurisdiction under similar statutory language. There may have been good reasons why taxpayers never insisted on a right to a hearing before this board, or to see the revenue's statement, in connection with the surtax assessments to which the board's jurisdiction related-in fact, for reasons into which I need not enter, the whole procedure of recourse to the board was little used. I cannot find in the fact that Parliament has taken over for use in quite a different context the procedure and language used in setting up the board any warrant for supposing that Parliament has given its endorsement or approval to any pre-existing practice. The manner in which, in a contested matter, the section is to be applied is entirely open in the courts. I should add that the particular procedure by which this case reached the High Court and ultimately this House has not been .....

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